Question 1

CARE has been set up by ___________ in collaboration with some banks and financial institutions.

Accepted Answer

CARE has been set up by IDBI in collaboration with some banks and financial institutions.

Question 2

The concept of Credit Rating was originated in which country?

Accepted Answer

The concept of Credit Rating originated in the USA, where credit rating agencies began to emerge in the early 20th century, with the first agency, John Moody's company, starting to rate railroad bonds in 1909.

Question 3

Which was the first ever instruments that was rated?

Accepted Answer

The first ever instruments that were rated were US Rail Road Bonds. This occurred in the 19th century when the rapid expansion of the railroads in the United States necessitated a method for investors to assess the risk of their investments, leading to the creation of the first bond rating system.

Question 4

Which of the following is NOT true with respect to Credit Rating

Accepted Answer

Credit rating does not provide buy, sell, or hold recommendations. Instead, it assesses the creditworthiness of the issuers of securities, not their investment potential.

Question 5

Which one of the following is the Regulator of the Credit Rating Agencies in India?

Accepted Answer

The Securities and Exchange Board of India (SEBI) is the regulator of credit rating agencies in India. SEBI oversees and regulates the securities market and entities associated with it, including credit rating agencies, to protect the interests of investors and ensure the development of the securities market.

Question 6

'Where Got' Where Gone' Statement is also known as

Accepted Answer

The 'Where Got Where Gone' statement is another name for the Funds Flow Statement, as it details the sources of funds (where got) and the uses of those funds (where gone).

Question 7

Operating Loss is a

Accepted Answer

Operating loss represents an outflow of funds as it indicates that expenses have exceeded revenues, thus it is considered an application of funds.

Question 8

Public Deposit accepted by a company represents

Accepted Answer

Public deposits accepted by a company represent a source of funds. Companies accept deposits from the public to raise money, which they can then use for various business activities, making it a way to generate funds.

Question 9

Redemption of Debenture by a company represents

Accepted Answer

Redemption of Debenture by a company represents an application of funds because it involves the outflow of cash or other resources to settle the obligation of the debentures.

Question 10

Only Current Assets and Current Liabilities are shown in the statement showing

Accepted Answer

Changes in Working Capital specifically deal with the difference in Current Assets and Current Liabilities over a period, reflecting how a company's short-term financial health and operational efficiency have changed.

Question 11

Decrease in Working Capital Denotes

Accepted Answer

A decrease in working capital is considered a source of funds because it implies that current assets have decreased or current liabilities have increased, thereby freeing up cash for the business.

Question 12

Which one of the following is not an Application of Fund?

Accepted Answer

Operating profit is not an application of funds; it is a source of funds. Applications of funds refer to the uses of cash, such as purchasing fixed assets or repaying loans, whereas operating profit represents the earnings from a company's core business operations, which can be used to fund those activities.

Question 13

When liability decreases it is a ________

Accepted Answer

The answer of When liability decreases it is a ________
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Question 14

Loss on sale of Fixed Assets / Investment will be shown on the credit side of adjusted profit and loss account.

Accepted Answer

Loss on sale of Fixed Assets / Investment is an expense and will be shown on the debit side of the Profit and Loss Account.

Question 15

The balances of Provision for Taxation were Rs. 20000 and Rs. 15000 in 2019 and 2020 respectively, if in the current year taxed paid were Rs. 10000 then what will be the current year provision for tax made from profit?

Accepted Answer

The answer of The balances of Provision for Taxation were...

Question 16

The proposed dividend for the Current Year would appear on the debit side of which account?

Accepted Answer

The proposed dividend for the Current Year would appear on the debit side of the Adjusted Profit and Loss Account. This is because the proposed dividend is a distribution of profits to shareholders, and therefore reduces the retained earnings of the company. The Adjusted Profit and Loss Account is used to show the profit or loss for the year after taking into account all adjustments, including the proposed dividend.

Question 17

If the shares are issued at a premium during the year then the amount of premium received will appear as a _______

Accepted Answer

The amount of premium received on shares issued at a premium is considered a source of fund because it represents additional capital coming into the business over and above the nominal value of the shares issued.

Question 18

Last year's proposed dividend has been paid during the current year and hence will be shown as________

Accepted Answer

Dividends paid are considered an application of funds because they represent cash outflows from the company to its shareholders.

Question 19

Any change in Current Liabilities will effect inverse change in the working capital.

Accepted Answer

An increase in current liabilities decreases working capital, while a decrease in current liabilities increases working capital, assuming current assets remain constant. This is because working capital is calculated as current assets minus current liabilities.

Question 20

From the following details find out the funds from operations: Net Profit after Tax Rs. 48,000 Depreciation Rs. 30,000 Loss on Sale of Outdated Machinary : Rs. 4000

Accepted Answer

Funds from operations can be calculated by adding back non-cash expenses and losses to the net profit after tax. Here, it is Rs. 48,000 (Net Profit) + Rs. 30,000 (Depreciation) + Rs. 4,000 (Loss on Sale of Machinery) = Rs. 82,000.

Quiz 5: Financial Management and Accounting